Nalco firms pricing, breaks; Pinnacle Foods sets launch, size and talk; Freescale strong

By Sara Rosenberg

New York, Dec. 2 - Nalco Holding Co. set pricing on its term loan add-on at the tight end of talk on Wednesday afternoon and then freed the deal up for trading where it was seen quoted above its original issue discount price.

In other loan happenings, Pinnacle Foods Group LLC released timing on its incremental term loan C and, with timing established, additional details on size and price talk emerged.

Also, Freescale Semiconductor Holdings I Ltd.'s old term loan continued to be firm on the back of the launch of an amendment, and Michaels Stores Inc.'s bank debt was flat to stronger following earnings news.

Nalco finalizes pricing

Nalco determined pricing on its $300 million term loan add-on, firming the deal at Libor plus 175 basis points, the low end of the original Libor plus 175 bps to 200 bps talk, according to a market source.

In addition, the original issue discount was set at 91, also the tight end of initial talk of 90 to 91, the source said.

There is no Libor floor.

The loan was just launched on Monday night via Intralinks and Bloomberg and was oversubscribed by the following morning, allowing the banks to accelerate the commitment deadline to the end of day Tuesday from the end of day Wednesday.

Nalco frees to trade

After pricing was announced, Nalco's term loan add-on allocated and hit the secondary market, with levels quoted above the discount price at which it was sold during syndication, the source remarked.

The add-on term loan was trading at 93¼ bid, 94¼ offered, the source added.

Deutsche Bank and Bank of America are the joint lead arrangers on the term loan. Those two banks plus Citigroup are the bookrunners.

Proceeds will be used to redeem the company's 7¾% senior notes due 2011.

Nalco is a Naperville, Ill.-based provider of water treatment and process improvement products and services.

Pinnacle launch next week

Pinnacle Foods nailed down timing on the launch of its $750 million incremental term loan C with the scheduling of a bank meeting for Monday, whereas before the deal was simply labeled as December business, according to a market source.

The size of the loan is different than original expectations, which had it at up to $875 million.

Price talk on the term loan C is Libor plus 500 bps with a 2.5% Libor floor and an original issue discount of 98, the source said.

By comparison, a commitment letter that was filed with the Securities and Exchange Commission had the term loan C pricing outlined as Libor plus 450 bps, with a 2% Libor floor and an original issue discount of 98.

In addition to the term loan C, the company is getting a $20 million incremental revolver, which is not being syndicated. The revolver add-on will be priced in line with the existing revolver.

Maturity dates on the incremental debt will match those of the company's existing debt.

Pinnacle lead banks

Barclays, Bank of America and Credit Suisse are the joint lead arrangers and bookrunners on Pinnacle Foods' credit facility, with Barclays the left lead. HSBC and Macquarie Capital are bookrunners as well.

Bank of America, Barclays and Credit Suisse have committed to provide 25% of the term loan C, while HSBC committed to provide 15% and Macquarie committed to provide 10%.

Also, Bank of America, Credit Suisse, HSBC and Macquarie each committed to provide $5 million of the revolver.

Pinnacle plans notes

Pinnacle Foods is also planning to sell $400 million of senior unsecured notes, the source said.

This note offering was initially expected to carry a size of $275 million but it was increased as the size of the term loan C was decreased, the source explained.

The notes are backed by a commitment for a one-year senior unsecured bridge loan.

Pricing on the bridge loan, according to the commitment letter, is Libor plus 600 bps with a 2.5% Libor floor. The spread will increase by 50 bps every three months. Pricing is capped at 12% through Dec. 18 and at 13% thereafter.

Pinnacle buying Birds Eye

Proceeds from Pinnacle Foods' term loan C, the notes and $365 million in equity from its sponsor, the Blackstone Group, will be used to fund the acquisition of Birds Eye Foods Inc. from Vestar Capital Partners, Pro-Fac Cooperative and management in a transaction valued at $1.3 billion.

The incremental revolver may only be used for general corporate purposes and working capital.

Closing of the transaction is expected to occur no later than the first quarter of 2010, subject to customary conditions, including regulatory approvals.

Pinnacle Foods is a Cherry Hill, N.J.-based manufacturer and distributor of branded packaged foods. Birds Eye is a Rochester, N.Y.-based packaged food company with more than $930 million of total sales.

Freescale unchanged to better

Moving back to the secondary market, Freescale Semiconductor's old term loan was unchanged to higher on the heels of the company's amendment launch, according to traders.

The old term loan was quoted by one trader at 85¼ bid, 86¼ offered, up half a point on the day, and by a second trader at 84¾ bid, 85¼ offered, flat from Tuesday.

Meanwhile, the new term loan was quoted by both traders at 103¼ bid, 104¼ offered, with the first trader saying it was down a quarter of a point on the day.

Freescale amendment details

Under the amendment proposal, Freescale is seeking the ability to issue secured and unsecured debt to reduce its term loan dollar-for-dollar and the ability to amend and extend its credit facility at a later date.

Citigroup is leading the amendment.

Responses are due on Monday. In return for consents, lenders will be paid a 7½ bps amendment fee.

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial and networking markets.

Michaels firm with numbers

Michaels Stores' bank debt was unchanged to a little stronger on Wednesday as the company came out with third-quarter results late in the previous session, according to traders.

The extended term loan was quoted by one trader at 89½ bid, 90¼ offered, up a quarter of a point, and by a second trader at 89¾ bid, 90¼ offered, in line with Tuesday's levels.

Also, the non-extended term loan was quoted at 86½ bid, 87½ offered by the first trader and at 87 bid, 87½ offered by the second trader, with both traders claiming that the paper was unchanged.

Michaels income improves

For the third quarter, Michaels Stores reported net income of $15 million, compared to a net loss of $20 million loss for the third quarter of 2008.

Net sales for the quarter were $929 million, a 2.5% increase over last year's net sales of $906 million.

And, adjusted EBITDA for the quarter increased 5.4% to $118 million, from $112 million for the same period last year.

Michaels Stores is an Irving, Texas-based specialty retailer of arts, crafts, framing, floral, wall decor and seasonal merchandise for the hobbyist and do-it-yourself home decorator.

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